Be Afraid

I am testifying before the Senate Finance Committee today, and as I was preparing this morning I noticed something unusual. The hearing looks like it should be productive and nonpartisan. As I read the background materials, it seemed that each individual scheduled to testify has a unique and substantive perspective, and none of them have an axe to grind.

Perhaps, then, we have formally identified the most powerful force in all of nature, the one thing other than terror capable of bringing the left and right together. What carries such force in these divisive times? The Alternative Minimum Tax (AMT).

Here is how it works. First, fill out your taxes the way you always have. Second, recalculate your taxes using a completely different set of rules. Third, pay whichever tax liability is higher. Apparently, politicians thought that Americans have so much fun filling out their taxes they decided to ask them to do it twice. But they messed up the design of the AMT and just about everyone will be paying it in a decade or so, completely by accident.

When a totally offensive tax hits a few million people, Washington is prepared to look the other way. But when everyone is harmed, self preservation kicks in, and Washington gets going. Today’s hearing is a sign that the Senate means business.

I know what you are thinking. How does the AMT work, and why is it so bad?

What? You were not thinking that?

Just wait. You’ll find out.